Forest City Decodes ESG Using GRESB

The world of corporate sustainability seems to have an evolving list of engagement and reporting frameworks, providing both opportunities and challenges.

Fortunately, when it comes to real estate and private equity portfolios, the answer for measuring and communicating sustainability performance is GRESB — the Global Real Estate Sustainability Benchmark. With more than seven years of market experience, GRESB has become the international framework used by leading real estate investment trusts (REITs) and management firms.

The gist is that GRESB helps real estate investors assess the performance of portfolios and infrastructure assets via a yearly survey that collects information on different environmental, sustainability and governance (ESG) measures.

To delve deeper into the topic of sustainable real estate, Schneider Electric, a GRESB Real Estate Premier Partner, recently hosted a webinar with Forest City. This large REIT was joined by GRESB to discuss the reporting scheme and its impact on environmental initiatives across the company’s diverse portfolio.

Forest City’s sustainability journey started back in the late 90s with a focus on the re-development of Stapleton, a community built at Denver’s former airport. The city decided it wanted this asset to be sustainable and turned to Forest City to help. Forest City delivered on the request and, not long after, it determined sustainability just made sense across its portfolio.

At first, the company’s sustainability efforts were more reactive, but eventually Forest City started to look internally and strategically at corporate responsibility, energy management and efficiency. Given the success of its initial efforts, it broadened programs to include environmental performance, as well as social and governance practices.

According to the Bloomberg ESG benchmark, Forest City doubled its performance score in three years, starting at 19.42 in 2012 and ending with a mark of 40.08 in 2015, based on its commitment to transparency.

Along with GRESB, Forest City reports to the Global Reporting Initiative (GRI) and Carbon Disclosure Project (CDP) — GRI as it helps communicate to both internal and external stakeholders, and CDP to answer requests from specific investors.

But why does the company use GRESB assessments?

Well, reporting in general is useful to measure against peers and find areas for improvement within a portfolio. Forest City also operates in seven markets in the U.S. that have municipal- or state-level sustainability, energy disclosure and/or climate action plans that include requirements for local companies. And four of these markets have a focus on how buildings account toward emission reduction goals.

Most importantly for Forest City, shareholders and tenants were asking for ESG information. Many were looking to measure their own performance or carbon footprint, and it was imperative that Forest City provide a full picture of all related real estate assets.

“We’ve been reporting to GRESB for two years now,” says Jill Ziegler, Director of Corporate Responsibility at Forest City. “The first year required a lot of manual data gathering, input and back-end manipulation to get ready for GRESB. I didn’t track the hours, but it wouldn’t be an exaggeration to say we had one analyst focused on it for multiple weeks.”

It didn’t help either that Forest City has a very diverse portfolio of assets, with different urban mixed-use buildings. Despite the difficulties data gathering and aggregation, Forest City earned a GRESB Green Star its first year, meaning it performed in the top quadrant of all global participants. Even so, the need for a more streamlined approach was apparent.

Dan Winters, Head of Americas for GRESB, said, “The biggest hurdle for GRESB participants is data access. Asking an organization for energy, water, waste and greenhouse gas metrics is relatively easy if it has five sites, but a significant challenge for a portfolio with 100 plus buildings.”

Forest City crafted an inventory management strategy to remedy this problem, an approach that provides examples of documentation and proof to GRESB around how data is collected and reported, validating the process and methodology for greenhouse gas inventory.

Once the plan was in place, Forest City looked to remove a lot of the hands-on work for data preparation via a utility bill and payment management process that’s powered by Resource Advisor from Schneider Electric.

Resource Advisor, an enterprise energy and sustainability software platform, simplifies GRESB requirements by automating data collection and analysis, and streamlining annual reporting to the framework. With a variety of new features that align with GRESB, the cloud-based software helps Forest City and other clients manage data accurately and effectively, accelerating the annual submission process.

According to Ziegler, by taking these steps to collect data more effectively, her team is able to focus on strategy to achieve its sustainability goals. Forest City was able to make improvements year over year in energy and greenhouse gas reductions instead of spending valuable time on compiling, validating and reporting data.